Jeremy Grantham in Barron’s: Pegs the S&P 500’s Fair Value at 1025

Jeremy Grantham was looking for a crisis for quite awhile. Now that it’s here, he believes the stock market could fall 20% below fair value before hitting bottom. That would put the Dow at approximately 7,800; or a 13% drop from here, based on his calculation of fair value. It actually hit that number intra-day on Friday, October 10th.

In the excellent interview linked below, Grantham attempts to explain how Hank Paulson, Ben Bernanke, and the supposedly smart bosses at Citigroup and Merrill Lynch failed to see the inevitable crisis headed our way.

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